18 Dec 2016

Recently we had updated our readers with the decision of the Delhi High Court holding that restrictions on cash-withdrawal under demonetization policy were not illegal. A challenge to this decision and other legal points were before the Supreme Court last week. Opining that these were important constitutional issues and were required to be addressed by a Constitution Bench of the Supreme Court, these challenges have been referred to such bench.

(i) Whether the notification dated 8th November 2016 is ultra vires Section 26(2) and Sections 7,17,23,24,29 and 42 of the Reserve Bank of India Act, 1934;

(ii) Does the notification contravene the provisions of Article 300(A) of the Constitution;

(iii) Assuming that the notification has been validly issued under the Reserve Bank of India Act, 1934 whether it is ultra vires Articles 14 and 19 of the Constitution;

(iv) Whether the limit on withdrawal of cash from the funds deposited in bank accounts has no basis in law and violates Articles 14,19 and 21;

(v) Whether the implementation of the impugned notification(s) suffers from procedural and/or substantive unreasonableness and thereby violates Articles 14 and 19 and, if so, to what effect?

(vi) In the event that Section 26(2) is held to permit demonetization, does it suffer from excessive delegation of legislative power thereby rendering it ultra vires the Constitution;

(vii) What is the scope of judicial review in matters relating to fiscal and economic policy of the Government;

(viii) Whether a petition by a political party on the issues raised is maintainable under Article 32; and

(ix) Whether District Co-operative Banks have been discriminated against by excluding them from accepting deposits and exchanging demonetized notes.

These questions have been referred as in view of these three judges these questions are of "general public importance" and there are "far reaching implications which the answers to the questions may have".

Further, noting that the interim order prayed by the parties i.e. to suspend the operation of the demonetization notifications, would amount to interfering with the executive policy of the Government, the Court declined to issue any interim directions. The Court, to arrive at this conclusion, duly noted the submission of the Government that "for the nature of decision taken by the Government - to unearth the black money or unaccounted money and to dry up the terror fund and defeat the attempt of circulation of large scale counterfeit currency, maintaining complete secrecy of such a decision was imperative."

The Supreme Court confined its observations to "commend to the Authorities to fulfill their commitment made in terms of the stated Notification permitting withdrawal of Rs.24,000/- per account holder of the Bank per week to the extent possible and review that decision periodically and take necessary corrective measures in that behalf."

The outcome of this challenge will be really interesting and can have, beyond the realm of these questions, far reaching implications on the flexibility and powers of the executive government to take action on issues affecting the society at large.

Setting aside the directions issued by the High Court to the effect that the judges of the High Court cannot be personally frisked at the airport, the Supreme Court in its recent decision has observed that "matters of security are not issues of prestige" and "these are not matters of 'status'". The Supreme Court has also criticized the High Court for ignoring the self-imposed restraint which if "not maintained the court as an institution would invite a justifiable criticism of encroaching upon" the terrain of the executive wing.

In its decision in Union of India v. Rajasthan High Court [Civil Appeal No. 717/2006, decision dated 14.12.2016] the Supreme Court was concerned with challenge to correctness of the decision of the Rajasthan High Court wherein directions were issued to the Central Government to include Chief Justice and other judges of the High Court in no-frisking list at all airports of the country. It was pointed out by the High Court that "the Chief Justice of the Rajasthan High Court travels often by air between Jodhpur and Jaipur in connection with his official duties and was being inconvenienced by not being exempted from pre-embarkation security checks". It was further observed by the High Court that "in view of the threat perception all VVIPs/VIPs should submit themselves to pre-embarkation security checks 'without exhibiting their egos' but if certain persons amongst them were to be exempted then all constitutional functionaries should be treated at par".

Accordingly the High Court, holding that even High Court judges were constitutional functionaries, directed the Central Government to include them in the list of no-frisking list at airports. The Supreme Court, however, did not approve. Setting aside the decision of the High Court, the Supreme Court made the following observations;

9 The High Court has evidently transgressed the ‘wise and self-imposed’ restraints (as they are described) on the power of judicial review by entertaining the writ petition and issuing these directions. The cause for invoking its jurisdiction suo moto was a news report in regard to a breach of security at Sanganer airport. Matters of security ought to be determined by authorities of the government vested with the duty and obligation to do so. Gathering of intelligence information, formulation of policies of security, deciding on steps to be taken to meet threats originating both internally and externally are matters on which courts singularly lack expertise. The breach of security at Sanganer airport undoubtedly was an issue of serious concern and would have been carefully investigated both in terms of prosecuting the offender and by revisiting the reasons for and implications of a security lapse of this nature. This exercise was for the authorities to carry out. It was not for the Court in the exercise of its power of judicial review to suggest a policy which it considered fit. The formulation of suggestions by the High Court for framing a National Security Policy travelled far beyond the legitimate domain of judicial review. Formulation of such a policy is based on information and inputs which are not available to the court. The court is not an expert in such matters. Judicial review is concerned with the legality of executive action and the court can interfere only where there is a breach of law or a violation of the Constitution.

10. A suo moto exercise of the nature embarked upon by the High Court encroaches upon the domain of the executive. In a democracy based on the rule of law, government is accountable to the legislature and, through it, to the people. The powers under Article 226 are wide – wide enough to reach out to injustice wherever it may originate. These powers have been construed liberally and have been applied expansively where human rights have been violated. But, the notion of injustice is relatable to justice under the law. Justice should not be made to depend upon the individual perception of a decision maker on where a balance or solution should lie. Judges are expected to apply standards which are objective and well defined by law and founded upon constitutional principle. When they do so, judges walk the path on a road well-travelled. When judicial creativity leads judges to roads less travelled, in search of justice, they have yet to remain firmly rooted in law and the Constitution. The distinction between what lies within and what lies outside the power of judicial review is necessary to preserve the sanctity of judicial power. Judicial power is respected and adhered to in a system based on the rule of law precisely for its nuanced and restrained exercise. If these restraints are not maintained the court as an institution would invite a justifiable criticism of encroaching upon a terrain on which it singularly lacks expertise and which is entrusted for governance to the legislative and executive arms of government. Judgments are enforced, above all, because of the belief which society and arms of governance of a democratic society hold in the sanctity of the judicial process. This sanctity is based on institutional prestige. Institutional authority is established over long years, by a steadfast commitment to a calibrated exercise of judicial power. Fear of consequences is one reason why citizens obey the law as well as judicial decisions. But there are far stronger reasons why they do so and the foundation for that must be carefully preserved. That is the rationale for the principle that judicial review is confined to cases where there is a breach of law or of the Constitution. The judgment of the Rajasthan High Court is an example of a matter where the court should not have entered.

11 By the time that the Rajasthan High Court dealt with the case, the list of exemptions had been modified to include Chief Justices of High Courts in the list of persons exempted from pre-embarkation security. Even assuming that the intervention of the High Court in such a matter could have been invoked in the first place (though we believe it should not have been) the matter should have rested there. The cause for which the suo moto writ petition was registered was left behind and the episode which led to the invocation of the jurisdiction found no place in the ultimate directions. The direction to include judges of the High Court was unrelated to the very basis on which the jurisdiction under Article 226 was invoked. But that apart, there is a more fundamental reason why the case should not have been entertained and directions of this nature ought not to have been issued.Matters of security are not issues of prestige. They are not matters of ‘status’. The Union government has adopted the position that the issue as to whether pre-embarkation security exemptions should be granted does not depend only on the warrant of precedence. Among the factors which are borne in mind is that the person who is exempted from pre-embarkation security checks must, according to the government, be secured by such a level of government security on a 24x7 basis, which would virtually preclude the possibility of any prohibited or dangerous items being introduced on board an aircraft through his or her baggage. The security perception of the Union government is that no exemption can be granted to a dignitary if he/she is not under effective government security coverage on a 24x7 basis. Heads of foreign missions in India are exempted from pre-embarkation security checks on a reciprocal basis. We are not called upon to decide upon the legality or justification for the inclusion of the name of any particular individual in the list of exempted persons in these proceedings. What we have said above is to emphasise that the view of the Union government is based on a considered assessment of security perceptions and ought not to have been interfered with in the manner that the High Court did in the exercise of its jurisdiction under Article 226.

In what can be described as a seminal primer, the Supreme Court in a recent decision has expounded upon the Legislative relationship between State of Jammu & Kashmir and Union of India. The case concerned challenge against a decision of the High Court of Jammu & Kashmir which declared Parliament as incompetent to apply the provisions of the SARFAESI Act to the State of Jammu & Kashmir. According to the High Court the State retained legislative competence and superiority to the extent that it denuded the power of the Parliament. The Supreme Court, exploring the nature and status of the State of Jammu & Kashmir under the Constitutional precincts of India, has expounded upon the extent upto which the State enjoys preferential treatment compared to the other State of India.

"since both the Constitution of India and the Constitution of Jammu & Kashmir are expressions of the sovereign will of the people, they have equal status and none is subordinate to the other."

"subjects mentioned in the State List of the 7th Schedule under the Constitution of India were frozen and can never be delegated or conferred on Parliament so long as Article 370 remains and therefore any transference of a State List subject to the Concurrent List later cannot apply to the State of Jammu & Kashmir."

"it is not enough under Article 370 to confer power on Parliament by a Presidential Order, but that every time Parliament enacts a law under such power, before such law can operate in the State of Jammu & Kashmir, the State Government’s concurrence must be obtained." ... "an amendment made to the Constitution of India will not apply unless the State concurs in applying it to the State of Jammu & Kashmir, in which case only a Presidential Order applying such amendment would take effect."

SARFAESI Act "encroaches upon the property rights of permanent residents of the State of Jammu & Kashmir and must be read down so that it will not be permissible under this Section to sell property belonging to a permanent resident of the State to a person who is not a permanent resident of the State"

Considering these objections, the Supreme Court delineated the legal position on the special status of the State of Jammu & Kashmir inter alia in the following terms;

"10. ... Amendments that are made in the Constitution of India are made to apply to the State of Jammu & Kashmir only if the President, with the concurrence of the State Government, applies such amendments to the State of Jammu & Kashmir. The distribution of powers between the Union and the State of Jammu & Kashmir reflects that matters of national importance, in which a uniform policy is desirable, is retained with the Union of India, and matters of local concern remain with the State of Jammu & Kashmir. And, even though the Jammu & Kashmir Constitution sets up the District Courts and the High Court in the State, yet, the supreme authority of courts to interpret the Constitution of India and to invalidate action violative of the Constitution is found to be fully present. ... We may also add that permanent residents of the State of Jammu & Kashmir are citizens of India, and that there is no dual citizenship as is contemplated by some other federal Constitutions in other parts of the world. All this leads us to conclude that even qua the State of Jammu & Kashmir, the quasi federal structure of the Constitution of India continues, but with the aforesaid differences. It is therefore difficult to accept the argument of Shri Hansaria that the Constitution of India and that of Jammu & Kashmir have equal status. Article 1 of the Constitution of India and Section 3 of the Jammu & Kashmir Constitution make it clear that India shall be a Union of States, and that the State of Jammu & Kashmir is and shall be an integral part of the Union of India."

"12. The first thing that is noticed in Article 370 is that the marginal note states that it is a temporary provision with respect to the State of Jammu & Kashmir. However, unlike Article 369, which is also a temporary provision limited in point of time to five years from the commencement of this Constitution, no such limit is to be found in Article 370. Despite the fact that it is, therefore, stated to be temporary in nature, sub-clause (3) of Article 370 makes it clear that this Article shall cease to be operative only from such date as the President may by public notification declare. And this cannot be done under the proviso to Article 370 (3) unless there is a recommendation of the Constituent Assembly of the State so to do. ..."

"13. ... The scheme of Article 370(1), therefore, is clear. Since the Instrument of Accession is an agreement between the erstwhile Ruler of Jammu & Kashmir and the Union of India, it must be respected, in which case if a matter is already provided for in it, it would become applicable straightaway without more, and only consultation with the Government of the State is necessary in order to work out the modalities of the extension of the provisions of the Government of India Act corresponding to the Constitution of India referred to in it. However, when it comes to applying the provisions of the Constitution of India which are not so reflected in the Instrument of Accession, they cannot be so applied without the concurrence of the Government of the State, meaning thereby that they can only be applied if the State Government accepts that they ought to be so applied. Under Article 370(2), the concurrence of the Government of the State, given before the Constituent Assembly is convened, can only be given effect to if ratified by the Constituent Assembly. This legislative scheme therefore illustrates that the State of Jammu & Kashmir is to be dealt with separately owing to the special conditions that existed at the time of the Instrument of Accession."

"15. It has been argued that Parliamentary legislation would also need the concurrence of the State Government before it can apply to the State of Jammu & Kashmir under Article 370. This is a complete misreading of Article 370 which makes it clear that once a matter in either the Union List or the Concurrent List is specified by a Presidential Order, no further concurrence is needed. Indeed, the argument is that a Constitutional amendment does not ipso facto apply to the State of Jammu & Kashmir under the proviso to Article 368 as applicable in the said State unless there is concurrence of the State Government and therefore, logically, it must follow that Parliamentary legislation would also require concurrence of the State Government before it can be said to apply in the State of Jammu & Kashmir. We fail to understand or appreciate such an argument. A constitutional amendment is different in quality from an ordinary law and, as has been held by us, it is clear that the language of Article 368 proviso and the language of Article 370 are different and have to be applied according to their terms."

18. ... The argument that Article 370(1)(b) ‘limits’ the power of Parliament is answered by the fact that the entire Constitution of India, as it exists in 1964, has been made applicable by Presidential order to the State of Jammu & Kashmir, availing both Articles 370(1) (b) and (d) for this purpose. And the expression ‘limited to’ does not occur in Article 370(1)(d),under which it is open to adopt the entire Constitution of India subject to exceptions and modifications, as has been noted above.

21. What is important to note in this Constitution, which was drafted by a Constituent Assembly elected on the basis of adult franchise, is that the State of Jammu & Kashmir is stated to be an integral part of the Union of India, and that the executive and legislative power of the State extends to all matters except those with respect to which Parliament has power to make laws for the State under Article 370 of the Constitution of India. A combined reading, therefore, of Article 370 of the Constitution of India, the 1954 Presidential Order as amended from time to time, and the Constitution of Jammu & Kashmir, 1956 would lead to the following position insofar as the legislative competence of the Parliament of India vis-à-vis the State of Jammu & Kashmir is concerned:

1. All entries specified by the 1954 Order contained in List I of the 7th Schedule to the Constitution of India would clothe Parliament with exclusive jurisdiction to make laws in relation to the subject matters set out in those entries.

2. Equally, under the residuary power contained in Entry 97 List I read with Article 248, the specified subject matters set out would indicate that the residuary power of Parliament to enact exclusive laws relating to the aforesaid subject matters would extend only to the aforesaid subject matters and no further.

3. Parliament would have concurrent power with the State of Jammu & Kashmir with respect to the entries that are specified in the Presidential Order of 1954 under List III of the 7th Schedule of the Constitution of India. This would mean that all the decisions of this Court on principles of repugnancy applicable to Article 254 would apply in full force to laws made which are relatable to these subject matters.

4. Every other subject matter which is not expressly referred to in either List I or List III of the 7th Schedule of the Constitution of India, as applicable in the State of Jammu & Kashmir, is within the legislative competence of the State Legislature of Jammu & Kashmir."

40. ... The High court judgment begins from the wrong end and therefore reaches the wrong conclusion. It states that in terms of Section 5 of the Constitution of Jammu & Kashmir, the State has absolute sovereign power to legislate in respect of laws touching the rights of its permanent residents qua their immovable properties. The State legislature having enacted Section 140 of the Jammu & Kashmir Transfer of Property Act, therefore, having clearly stated that the State’s subjects/citizens are by virtue of the said provision protected, SARFAESI cannot intrude and disturb such protection. The whole approach is erroneous. As has been stated hereinabove, Entries 45 and 95 of List I clothe Parliament with exclusive power to make laws with respect to banking, and the entirety of SARFAESI can be said to be referable to Entry 45 and 95 of List I, 7th Schedule to the Constitution of India. This being the case, Section 5 of the Jammu & Kashmir Constitution will only operate in areas in which Parliament has no power to make laws for the State Thus, it is clear that anything that comes in the way of SARFAESI by way of a Jammu & Kashmir law must necessarily give way to the said law by virtue of Article 246 of the Constitution of India as extended to the State of Jammu & Kashmir, read with Section 5 of the Constitution of Jammu & Kashmir. This being the case, it is clear that Sections 13(1) and (4) cannot be held to be beyond the legislative competence of Parliament as has wrongly been held by the High Court.

41. It is rather disturbing to note that various parts of the judgment speak of the absolute sovereign power of the State of Jammu & Kashmir. It is necessary to reiterate that Section 3 of the Constitution of Jammu & Kashmir, which was framed by a Constituent Assembly elected on the basis of universal adult franchise, makes a ringing declaration that the State of Jammu & Kashmir is and shall be an integral part of the Union of India. And this provision is beyond the pale of amendment. ..."

...

43. It is thus clear that the State of Jammu & Kashmir has no vestige of sovereignty outside the Constitution of India and its own Constitution, which is subordinate to the Constitution of India. It is therefore wholly incorrect to describe it as being sovereign in the sense of its residents constituting a separate and distinct class in themselves. The residents of Jammu & Kashmir, we need to remind the High Court, are first and foremost citizens of India. ...

...

We have been constrained to observe this because in at least three places the High Court has gone out of its way to refer to a sovereignty which does not exist."

Resolving a long-pending controversy, a judge-bench of the Supreme Court in its recent decision has affirmed what is popularly known as two-tier arbitration mechanism where the arbitration award can be challenged before an appellate arbitration panel. On the issue of the validity of such two-tier procedure, two-judges of the Court had difference of opinion and consequently the issued was referred for a bench of larger composition.

27. In our opinion, on a combined reading of sub-section (1) of Section 34 of the A&C Act and Section 35 thereof, an arbitral award would be final and binding on the parties unless it is set aside by a competent court on an application made by a party to the arbitral award. This does not exclude the autonomy of the parties to an arbitral award to mutually agree to a procedure whereby the arbitral award might be reconsidered by another arbitrator or panel of arbitrators by way of an appeal and the result of that appeal is accepted by the parties to be final and binding subject to a challenge provided for by the A&C Act. This is precisely what the parties have in fact agreed upon and we see no difficulty in honouring their mutual decision and accepting the validity of their agreement.

28. The fact that recourse to a court is available to a party for challenging an award does not ipso facto prohibit the parties from mutually agreeing to a second look at an award with the intention of an early settlement of disputes and differences. The intention of Section 34 of the A&C Act and of the international arbitration community is to avoid subjecting a party to an arbitration agreement to challenges to an award in multiple forums, say by way of proceedings in a civil court as well under the arbitration statute. The intention is not to throttle the autonomy of the parties or preclude them from adopting any other acceptable method of redressal such as an appellate arbitration.

...

34. It is therefore quite clear that the “final and binding” clause in Section 35 of the A&C Act does not mean final for all intents and purposes. The finality is subject to any recourse that an aggrieved party might have under a statute or an agreement providing for arbitration in the second instance. The award is binding in a limited context.

35. Unless this interpretation is accepted, a second instance arbitration would be per se invalid in India. This would be going against the grain of a long line of decisions rendered by various courts in the country which have accepted the validity of a two-tier arbitration procedure under institutional rules and have not taken the view that a two-tier arbitration procedure is per se invalid. ...

...

40. Be that as it may, the legal position as we understand it is that the parties to an arbitration agreement have the autonomy to decide not only on the procedural law to be followed but also the substantive law. The choice of jurisdiction is left to the contracting parties. In the present case, the parties have agreed on a two tier arbitration system through Clause 14 of the agreement and Clause 16 of the agreement provides for the construction of the contract as a contract made in accordance with the laws of India. We see nothing wrong in either of the two clauses mutually agreed upon by the parties.

...

44. For the present we are concerned only with the fundamental or public policy of India. Even assuming the broad delineation of the fundamental policy of India as stated in Associate Builders we do not find anything fundamentally objectionable in the parties preferring and accepting the two-tier arbitration system. The parties to the contract have not by-passed any mandatory provision of the A&C Act and were aware, or at least ought to have been aware that they could have agreed upon the finality of an award given by the arbitration panel of the Indian Council of Arbitration in accordance with the Rules of Arbitration of the Indian Council of Arbitration. Yet they voluntarily and deliberately chose to agree upon a second or appellate arbitration in London, UK in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce. There is nothing in the A&C Act that prohibits the contracting parties from agreeing upon a second instance or appellate arbitration – either explicitly or implicitly. No such prohibition or mandate can be read into the A&C Act except by an unreasonable and awkward misconstruction and by straining its language to a vanishing point. We are not concerned with the reason why the parties (including HCL) agreed to a second instance arbitration – the fact is that they did and are bound by the agreement entered into by them. HCL cannot wriggle out of a solemn commitment made by it voluntarily, deliberately and with eyes wide open.

45. We decline to read the A&C Act in the manner suggested by learned counsel for HCL and hold that the arbitration clause in the agreement between the parties does not violate the fundamental or public policy of India by the parties agreeing to a second instance arbitration. It follows from our discussion that the award which is required to be challenged by HCL is the award rendered on 29th September, 2001 by the arbitrator in London."

(a) Except as in sub para (b), the hair of the head will be kept neatly cut and trimmed. The hair of airman under detention/sentence will be cut no shorter than is customary/ throughout the service except on medical advice and except where on an application made by the airman he has been permitted to keep long hair. Face will be clean shaven. Whiskers and moustaches, if worn will be moderate length.

(b) Personnel whose religion prohibits the cutting of the hair or shaving of the face of its members will be permitted to grow hair or retain beard. However, such hair and/ or beards will be kept clean, properly dressed and will not be removed except on medical grounds or on application duly approved”.

The concerned person "submitted an application seeking permission to keep a beard on religious grounds, since he is a Muslim" and this application stood rejected, an action which was sustained by the High Court. According to the Supreme Court, under these regulations, "[t]he touchstone for being allowed to grow one’s hair or to retain a beard is where there is a religious command which prohibits either the hair being cut or a beard being shaved." Thus there was no merit in the plea that Muslim officers could insist upon retaining the beard. The Supreme Court explained the rationale for its conclusion in the following terms;

"5. The Air Force is a combat force, raised and maintained to secure the nation against hostile forces. The primary aim of maintaining an Air Force is to defend the nation from air operations of nations hostile to India and to advance air operations, should the security needs of the country so require. The Indian Air Force has over eleven thousand officers and one lakh and twenty thousand personnel below officers rank. For the effective and thorough functioning of a large combat force, the members of the Force must bond together by a sense of Espirit-de-corps, without distinctions of caste, creed, colour or religion. There can be no gainsaying the fact that maintaining the unity of the Force is an important facet of instilling a sense of commitment, and dedication amongst the members of the Force. Every member of the Air Force while on duty is required to wear the uniform and not display any sign or object which distinguishes one from another. Uniformity of personal appearance is quintessential to a cohesive, disciplined and coordinated functioning of an Armed Force. Every Armed Force raised in a civilised nation has its own ‘Dress and Deportment’ Policy.

6. India is a secular nation in which every religion must be treated with equality. In the context of the Armed Forces, which comprise of men and women following a multitude of faiths the needs of secular India are accommodated by recognising right of worship and by respecting religious beliefs. Yet in a constitutional sense it cannot be overlooked that the overarching necessity of a Force which has been raised to protect the nation is to maintain discipline. That is why the Constitution in the provisions of Article 33 stipulates that Parliament may by law determine to what extent the fundamental rights conferred by Part III shall stand restricted or abrogated in relation inter alia to the members of the Armed Forces so as to ensure the proper discharge of their duties and the maintenance of discipline among them.

...

10. During the course of the hearing, we had inquired of Shri Salman Khurshid, learned senior counsel appearing on behalf of the Appellants whether there is a specific mandate in Islam which "prohibits the cutting of hair or shaving of facial hair". Learned senior counsel, in response to the query of the Court, indicated that on this aspect, there are varying interpretations, one of which is that it is desirable to maintain a beard. No material has been produced before this Court to indicate that the Appellant professes a religious belief that would bring him within the ambit of Regulation 425(b) which applies to "personnel whose religion prohibits the cutting off the hair or shaving off the face of its members". ...

11. We see no reason to take a view of the matter at variance with the judgment under appeal. The Appellant has been unable to establish that his case falls within the ambit of Regulation 425(b). In the circumstances, the Commanding Officer was acting within his jurisdiction in the interest of maintaining discipline of the Air Force. The Appellant having been enrolled as a member of the Air Force was necessarily required to abide by the discipline of the Force. Regulations and policies in regard to personal appearance are not intended to discriminate against religious beliefs nor do they have the effect of doing so. Their object and purpose is to ensure uniformity, cohesiveness, discipline and order which are indispensable to the Air Force, as indeed to every armed force of the Union."

12 Dec 2016

In a recent decision the Supreme Court has set aside an order passed by the Allahabad High Court "since the High Court has travelled much beyond the lis to issue directions which" in its view "it could not have". In its decision in State of Uttar Pradesh v. Subhash Chandra Jaiswal [Civil Appeal No. 11381/2016 decision dated 29.11.2016] the Supreme Court notes that "it is expected that the High Courts while dealing with the lis are expected to focus on the process of adjudication and decide the matter". According to it, "the High Court should have been well advised to restrict the adjudicatory process that pertained to the controversy that was before it." The Court observed;

"11. Having noted the aforesaid submissions, it is necessary to state that it is expected that the High Courts while dealing with the lis are expected to focus on the process of adjudication and decide the matter. The concept, what is thought of or experienced cannot be ingrained or engrafted into an order solely because such a thought has struck the adjudicator. It must flow from the factual base and based on law. To elaborate, there cannot be general comments on the investigation or for that matter, issuance of host of directions for constituting separate specialized cadre managed by officials or to require an affidavit to be filed whether sanctioned strength of police is adequate or not to maintain law and order or involvement of judicial officers or directions in the like manner. To say the least, some of the directions issued are not permissible and all of them are totally unrelated to the case before the High Court. We are constrained to say that the High Court should have been well advised to restrict the adjudicatory process that pertained to the controversy that was before it."

Noting its observations in earlier cases, the Supreme Court went on to lay certain parameters to be observed by the High Court judges while dealing with crucial aspects which make inroads in the functions and ambit of the executive and legislative operations in the following terms;

"17. A Judge should not perceive a situation in a generalised manner. He ought not to wear a pair of spectacles so that he can see what he intends to see. There has to be a set of facts to express an opinion and that too, within the parameters of law.

...

23. Some of the directions, as we perceive, are in the sphere of policy. A court cannot take steps for framing a policy. As is evincible, the directions issued by the High Court and the queries made by it related to various spheres which, we are constrained to think, the High Court should not have gone into. It had a very limited lis before it. Be it stated, the directions may definitely show some anxiety on the part of the learned Judges, but it is to be remembered that directions are not issued solely out of concern. They have to be founded on certain legally justifiable principles that have roots in the laws of the country. ..."

...

24. ... Thus anlaysed, we are of the convinced opinion that the High Court has crossed the boundaries of the controversy that was before it. The courts are required to exercise the power of judicial review regard being had to the controversy before it. There may be a laudable object in the mind but it must flow from the facts before it or there has to be a specific litigation before it. Additionally, the High Court should have reminded itself that it cannot enter into the domain where amendment to legislations and other regulations are necessary. We are absolutely conscious that it is the duty of the State Government to discharge its obligations in the matters relating to law and order and remain alert to the issues that emerge. It has a duty also to see that the investigations are speedily completed in an appropriate manner. If there is a failure of law and order situation, the executive is to be blamed. In the maintenance of law and order situation the judicial officers are not to be involved. But the executive has to remain absolutely alive to its duties and we are sure, the State Government shall look into the aspects and endeavour to see that appropriate steps are taken to maintain the law and order situation.

25. A few words by way of clarification. Though we have not appreciated the opinion expressed and the directions issued by the High Court as the opinions are general in nature and directions fall in the legislative domain and some of them are beyond the scope of the litigation, yet we have observed certain aspects in the preceding paragraph. Our observations made hereinabove are words of caution for the State and we are sure that the State shall remain alive to its obligations."

However, before concluding on the subject, we feel that it is pertinent to point out the background in which the High Court felt compelled to issue the 'directions' as the Supreme Court opines them to be. The High Court was dealing with a case related to forgery being committed by some to obtain excise licences for sale of liquor in the State. Considering the material before it the High Court opined that even though investigation was carried out by the police officers, it was wanting in many respects. The High Court had sought an explanation from senior police functionaries who admitted to the lapse but attributed it to the fact that the investigation officers "remained busy carrying on other duties which resulted in getting less time for investigation purposes". As a fact it was pointed out that "in Allahabad district about 250 officers were conducting investigation for more than 11000 offences registered". The High Court opined that these aspects reflect "a very sorry state of affairs of maintenance of law and order in the State and paints a grim picture in which State is functioning, ignoring one of the most important aspects of administration, i.e., public safety, security and maintenance of law and order" and accordingly proceeded certain directions as in its view "time has come where State should be asked to show its real sincerity required in the field not only for effective registration of cognizable offences but also proper and well studied investigation and effective prosecution to ensure appropriate punishment to guilty persons."

Accordingly the High Court, directed the senior police officers to "consider" over certain aspects which in the view of the High Court could remedy these issues. The High Court required these officers to consider separation of "investigation of crime and prosecution" "from normal policing or prevention of crime and other works, by constituting separate specialized cadre managed by officials well trained in respective fields"; etc. In other words the directions of the High Court were not for the police officials to abide by but to consider them and if found appropriate, to engulf them in the State police machinery in the form of reform. The observations of the High Court were only in the context of proposals to be examined by the State Government and yet the Supreme Court concludes that these were in the nature of directions which the High Court should not have issued. In our view there seems to be an appraisal by the Supreme Court that the police officials considered bound by these observations of the High Court irrespective of the High Court itself termed them as proposals and it was in this perceived nature of the High Court's observations that the Supreme Could termed as as directions. While the appellate powers of the Supreme Court and its ability to modify or reverse any order of the High Court is undoubted, the Supreme Court instead of setting aside the High Court could also have resolved the State's appeal by merely clarifying that the observations of the High Court were in the nature of proposals and the State Government was not bound to treat them as directions.

Nonetheless, as things stand, the Supreme Court has set aside the High Court's order and directed all High Courts to confine their powers to adjudicating the lis and not go beyond. This could be a significant change in legal landscape in particularly so that the powers of the High Court in writ jurisdiction may come under scanner in the wake of the observations made in this decision of the Supreme Court.

The High Court bench, headed by the Chief Justice, noted the relevant notification and the contentions of the party to opine that the notification and the underlying action were within the policy domain of the executive and could not be re-appreciated by the judiciary.

The findings of the High Court are in the following terms;

"7. Apparently, the restriction imposed under Clause 2(vi) is only with regard to cash withdrawal from a bank account over the counter. There are no restrictions or limits for operating the bank account by non-cash method. This is clear from Clause (vii) which provides that there are no restrictions on the use of any non cash method of operating the account of a person including cheques, demand drafts, credit or debit cards, mobile wallets and electronic fund transfer mechanisms or the like. Therefore, the contention of the petitioner that Clause 2(vi) infringes the right of the account holder to withdraw from his account on demand is factually incorrect and misconceived. Be it noted that it is always open to the account holder to withdraw from his account on demand, but the restriction is only with regard to withdrawal in the form of cash. Even assuming that the restriction so imposed on cash withdrawal from a bank account has resulted in some inconvenience or prejudice to the petitioner, we are unable to hold that the same runs contrary to Section 5(b) of the Banking Regulation Act, 1949.

8. We also found that the Petitioner’s contention that Clause 2(vi) of the Notification dated 08.11.2016 shall not be made applicable to the bank deposits of the period prior to 08.11.2016, is wholly misconceived. According to us, no such distinction can be drawn between the bank deposits of the period prior to 8.11.2016 and after 8.11.2016 since the whole purpose of the restrictions imposed on cash withdrawal for a specified period i.e., upto 30.12.2016 appears to be to meet the demand of liquid cash in circulation in the light of the ban imposed on the bank notes of the denominations of Rs.500 and Rs.1000 under the Notification dated 8.11.2016.

9. It may be added that the manner in which the decision to withdraw the bank notes of specified amount w.e.f. 09.11.2016 is to be implemented is a policy decision which is beyond the scope of powers of judicial review. The law is well settled that the Court can only interfere if the policy framed is absolutely capricious or not informed by reasons or totally arbitrary and founded ipse dixit offending the basic requirement of Article 14 of the Constitution of India. It is also a settled principle of law that the Court cannot strike down a policy decision taken by the Government merely because it has been contended that another decision would have been fairer or more scientific or logical or wiser. The wisdom and advisability of the policies are ordinarily not amenable to judicial review unless the policies are contrary to statutory or constitutional provisions or arbitrary or irrational. {Vide: M.P. Oil Extraction v. State of M.P. (1997) 7 SCC 592; Ram Singh Vijay Pal Singh v. State of U.P. (2007) 6 SCC 44; Villianur Iyarkkai Padukappu Maiyam v. Union of India (2009) 7 SCC 561; State of Kerala v. Peoples Union for Civil Liberties (2009) 8 SCC 46 and M.P. v. Narmada Bachao Andolan (2011) 7 SCC 639 }

10. In this context we may also refer to Census Commr. v. R. Krishnamurthy (2015) 2 SCC 796 wherein it was held by the Supreme Court that the interference with the policy decision and issue of a direction to frame a policy in a particular manner are absolutely different and the courts are not to plunge into policy-making by adding something to the policy or by issuing directions describing the manner in which a statutory Notification could be implemented.

11. Having considered an identical issue arising out of the very same Notification dated 8.11.2016, a Division Bench of this Court to which one of us, (Chief Justice) was a member held in W.P.(C) No.11234/2016 titled as Birender Sangwan vs. Union of India and Ors. as under;

"The law is well settled that on matters affecting policy this Court will not interfere unless the policy is unconstitutional or contrary to statutory provisions or arbitrary or irrational or in abuse of power, since the policy decisions are taken based on expert knowledge and the Courts are normally not equipped to question the correctness of the same. The scope of judicial enquiry is therefore confined to the question whether the decision taken by the Government is against any statutory provision or it violates the fundamental rights of the citizens or is opposed to the provisions of the Constitution of India. [Vide: Parisons Agrotech (P) Ltd. v. Union of India (2015) 9 SCC 657, Manohar Lal Sharma v. Union of India (2013) 6 SCC 616, Union of India v. Dinesh Engg. Corpn. (2001) 8 SCC 491]

The power of judicial review cannot be extended to determine the correctness of such a policy decision or to find out whether there could be more appropriate or better alternatives. As held in BALCO Employees’ Union Vs. Union of India (2002) 2 SCC 333, it is not within the domain of the Courts to embark upon an enquiry as to whether a particular public policy is wise or whether a better public policy can be evolved."

12. For the aforesaid reasons the writ petition is devoid of merit and the same is accordingly dismissed."

The following directions have
been issued by the Supreme Court today and have to be “given effect to
within a period of 10 days;”

"(a) There shall be no commercial exploitation to give
financial advantage or any kind of benefit. To elaborate, the National Anthem
should not be utilized by which the person involved with it either directly or
indirectly shall have any commercial benefit or any other benefit.

(b) There shall not be dramatization of the National
Anthem and it should not be included as a part of any variety show. It is
because when the National Anthem is sung or played it is imperative on the part
of every one present to show due respect and honour. To think of a dramatized
exhibition of the National Anthem is absolutely inconceivable.

(c) National Anthem or a part of it shall not be printed
on any object and also never be displayed in such a manner at such places which
may be disgraceful to its status and tantamount to disrespect. It is because
when the National Anthem is sung, the concept of protocol associated with it
has its inherent roots in National identity, National integrity and
Constitutional Patriotism.

(d) All the cinema halls in India shall play the National
Anthem before the feature film starts and all present in the hall are obliged
to stand up to show respect to the National Anthem.

(e) Prior to the National Anthem is played or sung in the
cinema hall on the screen, the entry and exit doors shall remain closed so that
no one can create any kind of disturbance which will amount to disrespect to
the National Anthem. After the National Anthem is played or sung, the doors can
be opened.

(f) When the National Anthem shall be played in the Cinema
Halls, it shall be with the National Flag on the screen.

(g) The abridge version of the National Anthem made by any
one for whatever reason shall not be played or displayed."

Some of the other critical
observations of the Supreme Court in the context of National Anthem are as
under;

“The directions are issued, for love and respect for the
motherland is reflected when one shows respect to the National Anthem as well
as to the National Flag. That apart, it would instill the feeling within one, a
sense committed patriotism and nationalism.”

“… it is the sacred obligation of every citizen to abide
by the ideals engrafted in the Constitution. And one such ideal is to show
respect for the National Anthem and the National Flag.”

“… a time has come, the citizens of the country must
realize that they live in a nation and are duty bound to show respect to
National Anthem which is the symbol of the Constitutional Patriotism and inherent
national quality. It does not allow any different notion or the perception of
individual rights, that have individually thought of have no space. The idea is
constitutionally impermissible.”

As of now this is an interim order and therefore will have limited application till the time issue is finally decided by the Supreme Court. Nonetheless an important development in the space of 'Fundamental Duties' in the constitutional space.

The Motivation !!!

Rule 46 of the 'Standards of Professional Conduct and Etiquette' prescribed by the Bar Council of India requires that "Every advocate shall in the practice of the profession of law bear in mind that any one genuinely in need of a lawyer is entitled to legal assistance even though he cannot pay for it fully or adequately and that within the limits of an Advocate’s economic condition, free legal assistance to the indigent and oppressed is one of the highest obligations an advocate owes to society."

Sharing this "vision for a better-world" and serving to the Humanity, this blog is a small attempt by a group of like-minded lawyers to spread the word on "LAW" across the society.

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